...and down she goes!

I agree, but remember my target is a forecast.

I base the lower number on a gentle rise in interest rates due to an improving economy and a gentle reduction in quantitative easing. Higher interest rates generally strengthen the dollar and make fixed income investments more appealing.

As those events play out, my guess is that Silver's fair value will continue to fall...over the next 6-12 months. Actually, I expect to see Silver rebound slightly over the summer months, but start to fall again...beginning in the Fall.

 

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My point is that just because you don't know something specifically doesn't mean you can't compare against it. You may know for a fact that your car is moving when you are inside of it, but without assistance from another person or your speedometer you can't know precisely the speed. Someone could ask, are you going 20 mph or 50 mph? You might say I don't know but it's definitely more than 20. The metaphor holds water even if loosely.

I am not going to put a price out there. I can make an argument for fair value silver in triple digits but I'm not going to, because it doesn't matter. What matters is that the price mechanism is broken and that metals are unique compared to all other commodities, widgets, etc. because they are elements. We can't produce them in a factory. They need to be looked at in their own context.

I will consider silver undervalued until such time as supply exceeds demand (old silver scrap no longer being needed due to mining supply alone being sufficient which it currently is not), and also until real interest rates are positive. When those 2 things occur I will begin transitioning a portion of my stack back into my home. Or if gold and silver become money again and are valued accordingly I will do the same.

Price is of no significance to me other than what exchange ratio I get when converting dollars. Since there is no way to know fair value there is no way to throw a target out there for what is undervalued except to say that due to the current environment it appears to be very undervalued.

 

Hmmm...maybe I don't know what you're trying to say. :scratch:

 

I'm simply saying that cost of production at $20 is a far cry from being the sole determinent of fair value.

 

Good point! :thumb:

 

I agree, and I will also add that supply and demand are also not the sole or even main determinant of the price of silver in either the short or intermediate term. This is the fallacy made by those attempting to "quantify" a market that is largely driven by psychology. In fact, silver's volatility (in my humble view) points to the difficulty (and perhaps futility) of attempting to arrive at a fair price using mathematical analysis (not to mention that I have recently listened to a report pointing to the cost of production rising exponentially, which implies a fast-moving target). To be clear, I think the further a horizon is broadened, which can mean years, the more accurate a quantitative analysis is. So it has some use, tho with plenty of margin of error. I come with a view that the greatest determinant of silver's price is the value of the dollar, which by no means is an original viewpoint. At some point, and that means longer term, the dollar will be devalued not only against finite commodities but also relative to other major currencies. With this assumption, silver will have a comfortable floor with the potential to break out yet again to new highs.

 

Here's a reasonable alternative to Silver... (they can't say it on the internet if it isn't true...right?)

[video=youtube_share;ass6bKxjl8A]http://youtu.be/ass6bKxjl8A[/video]

 

Lol!! I don't even know where to begin... I'll just touch on 3 points:

1) "$1 today is .... $1 in 5 years." Ok, yes, I guess technically that is true. But they will NOT be worth the same. Inflation will set in.

2) "Silver is not legal currency..." Ummm... Yes, any silver minted by the government is legal tender, and so is any pre-1965 silver US coin.

3) "People just don't want to carry around all that heavy metal in their pockets when it could be lightweight paper." Been to Canada any time recently?


And where the heck did he get all that paper money from? Is it distributed and sold to whoever wants it?

 

You forgot the most important point...

"Money is green...Silver isn't green!"

All those stacks are pretty impressive!

...and that was another point in the video. "They stopped making it so inflation is 0%". :thumb:

 

:whistle:

 

I went to one of my LCS to buy on the dip and they aren't pricing their ASE's by "spot plus $X" anymore. There's a sign in the tray that reads: "American Silver Eagles $29.25 Each". I think they're doing that because nobody wants to know they're paying $7.50 over spot.

I like to support local businesses as much as the next guy, but that's a pretty big pill to swallow!

Maybe I'll go order some of those OPM bars at $0.89 over spot from Provident...

 

I was offered a bunch of half dollars at 16 x face. Good deal? Or should I go with the Zimbabwe dollars?

 

The Zimbabwe dollars, even though they are no longer legal tender, they go for $5.00 EACH on Ebay.

 

Melt is 15.6x face right now, but it was over 16x this morning. As long as they're 90% halves, it's a fair deal.

 

Definitely a decent deal, I don't think you could find any half dollars for less than 18x face retail.

Provident Metals is paying 16.89x face for half dollars.

 

Might not be a bad idea for a quick flip, but I sure wouldn't hold on to them for the long term. If the novelty of them ever wears off they'll be worth pretty much nothing.

 

The novelty will probably wear off on the lower denomination notes, but there will probably still be demand for this note, until some country issues a note that exceeds even 100 trillion units in face "value"

 

Notice that it says..."I" promise to pay the bearer on demand... and it's signed by "Dr. G. Gono"

...I would feel better if it were signed by "Dr. G. Stillhereo"

 

Take the Zimbabwe dollars at face.

 

I hit up my LCS on Friday to get this dip and they were $5 over spot for 2013 Eagles and Maples, $6 over spot for earlier years except 1996 eagles were an even $50. I snagged some 1988 sealed maples with a little toning and a few 1966 Canadian canoe dollars. They also had BU buffalo rounds for $2.75 over spot.